In a gruelling five-year selection process, the Indian Air Force (IAF) tested six foreign fourth generation plus fighters—the American F-16IN and F-18E/F, the French Rafale, the Swedish Gripen NG, the European Eurofighter Typhoon, and the Russian MiG-35. After conducting comprehensive testing against more than 600 parameters, the IAF found that the Eurofighter Typhoon and French Rafale met its requirements.1 Of the final two, the Rafale has been selected for detailed purchase negotiations on the basis of its lower total life cycle cost as compared to the Typhoon. The deal is reported to be worth between US $ 10.4 and 20 billion. 2 While there is joy and great anticipation in several quarters about the entry of the Rafale into the IAF service, the issue of the strategic vulnerability that yet another foreign purchase of weaponry places upon the country tends to get easily overlooked.

A growing India that has an ever increasing number of national interests beyond her shores need to field a potent military capability to defend these interests. It must be noted that only indigenously manufactured weaponry, backed by a robust industrial capability, would convey strategic independence and an independent national capability and power. Thus, the development of a robust and capable indigenous aircraft industry is a prime requirement for India in its pursuit of high growth, and the military capability needed to secure a sustained high growth trajectory.

In order for the nation to be able to build world-class aircraft, it must first invest in building a robust indigenous aircraft industry. This effort would gain immensely not just from looking at similar industries abroad, but also looking at other industrial examples within the country.

Aircraft design and development is a very costly enterprise. The fixed costs involved in design and manufacture of new aircraft for the companies involved in design and manufacturing is very high. This is so even if the government carries some of the financial burden. However, despite the consequent reduction in cost, designing and building a modern state-of-the-art fighter aircraft such as the F-18 cost the design and manufacturing companies about US $ 5 billion in 1975.3 These costs remained much too high for manufacturers to bear, especially in the US system where the US Air Force (USAF) typically selected two manufacturers to design different aircraft to meet the same requirement, and the winner was decided in a fly-off of the prototypes [for example, the YF-16 vs. the YF-17, won by the YF-164 ; and the YF-22 vs. the YF-23, won by the YF-22].5 The losing company is thus unable to recoup its initial investment of several billion dollars. This is likely to have been a factor in the merger of erstwhile giants in the aircraft business with their erstwhile rivals—General Dynamics’ aircraft division merged with Lockheed, as did Martin Marietta, to form Lockheed Martin6 and McDonnell Douglas, of the F-15 fame, merged with Boeing.7 ; the Tornado was built by Britain, Italy, Germany and Spain; and, the Eurofighter Typhoon involves Britain, Italy, Germany and Spain.8

The above discussion clearly illustrates the high costs and risks involved in aircraft design and manufacture. The risks have been so great that large US companies with high net worth and annual turnover have found it tough to continue in the field. While private players may or may not operate in this field, it is clear that there needs to be some kind of support system to ensure that companies operating in the field are able to stay in business and achieve fair profitability.

The Indian Aircraft Industry is dominated by one big public sector player—Hindustan Aeronautics limited (HAL). Starting out as a private company, HAL was nationalised at the time of independence. It is involved in both designing and manufacturing aircraft. Alongside HAL, the Defence Research and Development Organisation (DRDO) is responsible for research and development (R&D). Until the economic reforms of 1991, private players were not allowed to operate in the aircraft industry in India. Since then, a few big businesses have expressed interest in entering into this field. A few more government owned and run organisations exist such as the National Aeronautics Laboratories (NAL) and the Aircraft Development Agency (ADA). Being government-owned and run as part of the Ministry of Defence (MoD), these organisations suffer from the ills of bureaucracy and reliance upon the government for funds and clearances for R&D. Moreover, projects are mostly undertaken only when a specific requirement is projected by the user to the government. This situation leads to difficulties in retention of expertise and lack of regular R&D in cutting-edge technologies. HAL and DRDO have had some success in the design and manufacture of trainers such as the HT-2 and HJT-16 both of which saw extensive service with the IAF. Fighter projects such as the HF-24 Marut did not meet full designed performance expectations due to the non-availability of engine. The Light Combat Aircraft (LCA) Tejas, still under development towards achieving Final Operational Clearance (FOC), has also suffered from the lack of an indigenous engine. Tejas is currently behind schedule and has cost much more than the initially expected programme cost.

The dismal record of the indigenous aircraft industry in meeting IAF requirements brings out the pressing need to reform this industry in order to make it more effective. A possible way forward could be to borrow a few ideas from the Indian Navy (IN) in order to build a model suitable for the IAF and its specific requirements. For instance, the Navy, in co-operation with Indian shipyards, has, in the recent past, inducted several state-of-the-art warships designed and built in India. At Naval Headquarters in New Delhi, the IN has a department which deals primarily with warship design and development. This branch designs future warships in keeping with the IN’s requirements and then co-ordinates with shipyards to build these designs. As a result of this system, the IN has warships built to its own specifications in India. Thus, the end user is fully involved in the process, from the initial design stage till the final induction stage. The companies that actually build the ships are, for the most part, public limited companies under government ownership. The lesson to be learnt here is that close co-ordination with the user from the initial design stage itself gives the user a buy-in and a sense of ownership of the project that bodes well for its eventual success. In contrast, the IAF headquarters limits itself to the preparation of Air Staff Requirements (ASRs) and then the case is pushed for these to be met by suppliers, either domestic or international.9 It is this author’s opinion that the IAF would gain immensely from utilising its pool of highly-qualified aircraft engineers to form and man an aircraft design department at Air HQ to design new aircraft, and then to co-operate with aircraft building organisations to manufacture these. This model would have the advantage of user involvement from the inception phase to the induction phase of future aircraft projects. It is recommended that the IAF and the Indian aircraft industry adopt the IN model to meet their requirements.

Currently, the IAF is in the process of inducting several advanced aircraft from abroad. These include the French Rafale fighters (for the Medium Multi Role Combat Aircraft (MMRCA) project), American C-17 Globemaster-IIIs and C-130s, a Fifth Generation Fighter Aircraft (FGFA) [T-50 prototype derived] from Russia, and collaboration to develop a Medium Transport Aircraft (MTA) with Russia. India has an offset policy that requires the foreign company winning any of these contracts to invest between 30 per cent and 50 per cent of the contract value in India. It is important for the MoD and the IAF to ensure that this opportunity does not go waste and that the offset investments in India are of a kind that can contribute to the development of the Indian Aircraft Industry. As mentioned earlier, the Indian aircraft industry today comprises some DRDO labs, NAL10 , ADA11 , HAL12 , civil operators in the aircraft industry such as Taneja Aerospace and Aviation Limited (TAAL) 13 , Mahindra & Mahindra (M&M) Aerospace Division, and Tata Advanced Systems Aviation Divisions. It must be ensured that these players are able to upgrade their skills and capabilities in the future while making a fair profit, and thus staying in the aircraft building business with the aim that the Sixth Generation Fighter—which will be inducted into the IAF at some future date—is designed and built in India, and that Indian airlines too fly indigenously designed and built aircraft. While the offset clause of current large aircraft purchase deals could be leveraged to improve the technological state of Indian companies, keeping in mind the high costs involved in design and development, the government could continue to partially fund, at least, the design and development phases of new aircraft projects, be these in the private or public sector.

To conclude, while the Rafale may be the best aircraft for the IAF’s current requirements in terms of capabilities and life-cycle cost, whether it also is the best aircraft for the Indian economy and India’s overall long-term security is the question that begs an answer. For long-term benefits, the focus needs to be on domestic industrial capability enhancement using current purchases as the tool towards that end.